What We Think: Jindal tax plan could hurt the poor

The Jindal administration seeks to do away with personal and corporate state income taxes in favor of higher sales taxes that would for the first time also cover a wide variety of services, like hair cuts, cable service, lawn care and much more.

Opponents to the plan say it would place an uneven and unfair burden on the poor and middle class and hurt small businesses. In spite of assurances to the contrary by the Jindal administration, we believe they are right.

According to the Jindal administration, the greatest benefit of the "tax swap" would be that a Louisiana sans income tax would attract more out-of-state employers, thus helping the economy.

And the intention is to have the tax swap be "revenue-neutral," meaning there would be no more and no less money going into the state coffers than there has been previously. But a recent report from the nonpartisan Public Affairs Research Council shows that the state would come out $650 million short under the new plan. The Jindal administration, not surprisingly, disputes this information.

Experts have different opinions about the net effect on the public.

Tulane business professor Mark Rosa said Thursday in a telephone interview that he is personally in favor of the higher sales tax because those who have been able to avoid paying taxes because they hid some or all of their income by being paid in cash will be paying into the system.

But Rosa also believes that unless better provisions are made to balance out the higher sales tax payments, the poor, who often owe no income tax, will suffer.

Rosa explained that an income tax is a "progressive tax." The more you earn, the more you pay.

A sales tax is a "regressive tax." The less you earn, the higher the percentage of your income taken for sales taxes.

In an email response, the Jindal administration said there will be exemptions from the sales tax for food, prescription medications and residential utilities.

Those exemptions, said state Rep. Stephen Ortego, are already present in the state constitution.

We believe the exemptions are good, but not enough.

In the same email, administration staffers spoke of creating the Family Assistance Rebate Program and the Retirees Benefits Program to compensate eligible individuals and families for the difference between the extra money they pay in sales taxes and the amount they would have paid - or not paid - in income taxes.

But low wage-earning families, who barely make it to their next paycheck, probably will run out of money before the rebate checks come in, Rosa said.

And that is an important point to remember.

While most opponents have focused their attention on the predicted effects on the poor, there is also growing concern in some quarters about the effects on business.

Don Briggs, president of the Louisiana Oil and Gas Association, recently told The Daily Advertiser's Editorial Board, of which he is a member, that taxing services could put oilfield service companies at a disadvantage against companies from states where there are no similar taxes on services.

All service providers will have to choose between passing the cost on to customers or absorbing it themselves.

The Jindal administration will most likely continue to hammer out the details of the new tax plan between now and April 8, when the state Legislature is back in session.

Those specific details on the tax plan have been slow in coming out to the public. But what has been revealed so far should give us all pause.

A plan that relieves the tax burden on the wealthy without better safeguards for the poor is not one lawmakers or taxpayers should support.

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What We Think: Jindal tax plan could hurt the poor

Gov. Bobby Jindal's plan to simplify Louisiana's tax system is raising some complex issues.The Jindal administration seeks to do away with personal and corporate state income taxes in favor of higher